Investors reached for extra helpings of General Mills shares Wednesday after the food giant posted better-than-expected quarterly earnings and again raised its full-year earnings estimates.

Shares of the Minneapolis-headquartered food maker climbed 4% in midmorning trading. For its fiscal first quarter, ended Aug. 30, the company reported profit of $1.25 a share, up from 79 cents a share a year ago. Wall Street analysts, on average, expected earnings of $1.03 a share. Revenue climbed to $3.52 billion, an increase of 0.6%.

Chief Financial Officer Don Mulligan said on a Wednesday conference call that profit margins recovered significantly on commodity price declines. He explained that the strong start prompted General Mills to move to a full fiscal year forecast. "This performance would exceed our long-term growth targets despite negative foreign exchange and one less week in the fiscal year."

In a brief note published Wednesday, Deutsche Bank analyst Eric Katzman more or less agreed with Mulligan s assessment. Though the company s sales didn't rise as fast as Katzman expected, its bottom line got a boost from a gross margin increase of 501 basis points and stronger foreign currency results with international sales.

Morningstar analyst Erin Swanson was also impressed with the maker of brands including Cheerios, Progresso soups and Betty Crocker baking products. "We believe General Mills' GIS first-quarter results support our thesis that this firm's portfolio of market-leading brands, as well as its expansive global network, should enable it to stand out in the packaged food industry for the foreseeable future," she wrote.

Bottom Line: Buy
As consumers recover from the recession, but still watch their budgets, name-brand foods will see sales growth.

US Airways Lowers Flaps

Shares of US Airways Group were pulled back to earth Wednesday after the carrier announced another share offering to raise cash--and fueled shareholder concerns about dilution.

The Tempe, Ariz.-headquartered airline said it sold 26.3 million shares of its common stock to Citigroup, the underwriter in the public offering of those shares. It said it hopes to raise about $130 million for the winter season, when airlines generally burn through cash. US Airways also granted Citi an option to purchase up to an additional 4 million shares. The deal, which comes on the heels of a $150 million stock-debt offering in May, is expected to close Sept. 28.

Last week, American Airlines parent AMR last week announced a mixed-source financing deal. Its shares dropped Wednesday after it priced its offering of 48.5 million common shares at $8.25 apiece and also priced $400 million of 6.25% five-year convertible senior debt.

Helane Becker, an analyst with Jesup & Lamont, said carriers are both preparing for a lean season and a possible downturn. "You just don't know what's going happen, she said. There's this nascent recovery, and it looks like business travel is a little better than it was." Add in the robust market rally of the last several months, and the timing looks right to tap the public markets . "The airlines are looking at it, saying they might as well take advantage of the demand and raise capital and strengthen their balance sheets," Becker says.

Bottom Line: Hold
This stock is being hit harder than its competitors because it's raising money through a straight stock offering and the dilutive effects are direct. Veteran airline investors understand the seasonality of these moves and will wait to see how US Airways performs.